Kindle 4 can improve on Kindle 3 via optical touch

Mr. Bezos was talking about the Kindle 3 on the Charlie Rose show and mentioned that having a touch layer disrupts readability because it adds glare and reflects objects.

However, there is an easy solution for adding touch without disrupting readability that Amazon should consider for Kindle 4.

IR sensors can be used to give Kindle 4 touch without disrupting readability

My PC is an HP TouchSmart (it’s got a multi-touch capable monitor) and it uses IR sensors in the frame around the screen. It’s just like the red infra-red security beams they show in movies that involve stealing diamonds in form-fitting clothes. You break one of the beams and it registers a touch.

There isn’t any physical touch layer to disrupt reading. The IR sensors would be around the frame/border of the eInk screen and wouldn’t get in the way.

This is how the HP TouchSmart’s screen works –

  1. There are infra-red sensors around the frame of the screen.  
  2. When your finger is about half a centimeter away it triggers the sensors.
  3. You don’t have to actually touch the screen. Just tested this multiple times. Plus it works with a pen or a finger.
  4. An x coordinate and a y coordinate are calculated corresponding to your touch (or touches). There must be some algorithm to approximate what point on the screen your touch was intended for. Since there are a lot of beams disrupted and we know the coordinate each represents we can approximate the exact point you intended to touch with your finger.
  5. The IR sensors convey this information to the PC and it indicates a touch.

You basically get a multi-touch capable screen without having to add any physical layers to the screen.

We can also add algorithms that ignore your palm or hand resting on the screen. That would let the IR sensors capture handwriting and the Kindle 4 could be used as a Notepad. 

We could easily place IR sensors along the edges of the eInk screen. Checking out my Kindle 2 and the eInk screen is already slightly recessed and there probably is enough space to fit in IR sensors.

Could Kindle 4 handle optical touch?

We know the reason Kindle 3 isn’t using touch is because of readability. However, are there other considerations?

  1. Battery Life Issues – This may or may not be an issue. If it is an issue the solution to this would be to use a proximity sensor – turn on the IR sensors only when a user’s hand comes near the screen. 
  2. The Touch sensing would probably not be as good – There’s no denying the touch would probably not be as good as it would with an actual physical layer. However, optical touch is still much better than zero touch.
  3. Perhaps it is a distraction – Well, Touch adds to usability by making things easier. It’s not really distracting from reading unless you specifically make an effort to create touch based apps that are a distraction from reading.
  4. The cost – Not sure of this since don’t really have any information on the cost of these IR sensor powered touch screens.
  5. Weight and Fragility – Would it be easy to break the IR sensors? Would they add a lot of weight? The answer is probably no and no.

We basically get to add a killer feature (even though it isn’t strictly required for reading it is a killer feature) and we get to do it without compromising on the quality of reading. It’s definitely a feature Amazon should consider for Kindle 4.

Optical Touch is easier than a lot of the alternatives

We’ve seen Amazon explore a lot of interesting ideas for letting users interact with the Kindle – Kindle Electronic Pen, Kindle Gesture Recognition, Multi-touch technology from TouchCo.

Each of these have specific drawbacks – An electronic pen would be an entire new purchase and people would keep losing it, Gesture Recognition sounds a bit complicated, and TouchCo’s technology probably requires a physical touch layer. Plus all of these haven’t yet been implemented. Two are patents and one (TouchCo) is in development mode.

With IR sensor based optical touch you have lots of companies implementing it and it’s a proven technology – HP has been selling TouchSmart computers for close to 1.75 years.

Whatever objections there might be to using optical touch in Kindle 4 there’s one very strong argument for incorporating it.

Qualcomm is already doing it with Mirasol

Qualcomm has a video of Mirasol color eInk screens at SID 2010 and it’s claiming a mirasol display with Optical Touch (it’s at 00:40 in the video) –

mirasol shows two 5.7″ XGA displays

1. mirasol Display with Capacitive Touch
2. mirasol Display with Optical Touch

If Mirasol can do it there’s no reason Amazon can’t introduce it as a killer feature in Kindle 4 or in Kindle DX 3.

Will Amazon actually add optical touch to Kindle 4?

That question has an easy answer if you believe Kindle 4 is going to use Mirasol screens. In that case one out of the two touch technologies Mirasol is showing off will probably make it into the Kindle 4.

Going with Qualcomm and its optical touch screen would deliver four key features in one go – A color screen, video support, super fast page refresh speed, and touch. With the optical touch screen there’s no loss in readability since there is no physical touch layer to cause harm.

Basically, if Amazon incorporates the Qualcomm Mirasol screen with optical touch in Kindle 4 we’ll probably get a release that outshines even the current Kindle 3 release. Chances are that it’ll be at a higher price point and it makes you wonder if there’s place for a new member in the Kindle family – Kindle Pro or perhaps Kindle Color.

In case Amazon doesn’t go with Qualcomm Mirasol it should still consider adding optical touch technology. Kindle 3 is a very impressive release and Amazon is going to have to add some solid improvements in Kindle 4 to make sure it measures up. Adding optical touch gives you touch capability without hurting readability and its definitely worth considering for Kindle 4.

Casualties due to Kindle and eBooks

Tired of writing about the Kindle 3. Went through a list of interesting articles from July. 

There’s an overwhelming sense of destruction. If you step away from 70% royalties and readers reading in large fonts and the good Kindle and Nook are doing there’s a train wreck – players in the current publishing world are becoming casualties.

  1. Bookstores are closing down. 
  2. Libraries are struggling. Perhaps the most worrying.
  3. Used book stores are in trouble.  
  4. Publishers are panicking.  
  5. Authors are worried about the future.
  6. Distributors suddenly see their entire raison d’être vaporizing.
  7. Agents don’t know where to turn.

It makes you wonder – Which of these players are going to survive if we transition over to a world where 75% of book sales are ebooks?

Participants likely to survive the Kindle + Nook ebook revolution

You have to look at the Kindle 3 and where the ebook market is and feel there’s a pretty reasonable chance ebooks do make it all the way to 75%. If they do – What roles could the current players aspire to? Who could take up positions of power?

The Platforms like iBookstore and Kindle

There’s a very strong chance that everyone other than the author and reader gets replaced by the Platform, which gets 30%, and a few small service providers, Agents and Editors perhaps, who might get just 15%.

Amazon and Apple are very well placed to be the Platform. Google will try but it doesn’t have a device. B&N might be able to figure out a way to do this.

The reality of ebooks is that we do need a platform – It connects readers to authors, provides the infrastructure that links ebooks with readers, adds value to eReaders, and makes storage and distribution possible.

The Platforms are going to be the big winners.

The eReaders like Kindle 3 and Nook

While ebooks are going to be a tens of billions of dollars a year business eReaders are going to be nearly as profitable.  

There will perhaps be over ten million people buying eReaders in 2011 and the number might grow to hundreds of millions of people once eReaders replace paper more broadly.

The Kindle 3, or to be more precise the Kindle WiFi, represents a move in this direction. To replace paper and eventually sell hundreds of millions of eReaders a year.

There are two schools of thought – One feels that multipurpose devices will kill off eReaders. Another feels that eReaders will be fine and their focus on reading provides enough value to ensure they survive and thrive. If the latter school of thought is proven to be right then eReaders are going to be big winners.

Literary Agents like Andrew Rylie

There is still a very lucrative 15% cut available for anyone who can provide authors with the services they still need.

In particular, there will always be a 15% cut for any company that will let authors focus on writing and will help improve authors’ chances of success. Literary Agents are well placed for this role as they are the closest to authors.

The literary agents will be fighting with new Publishers for this role.

New Publishers like Open Media

New Publishers will try to fulfil a hybrid role of Publisher plus Agent and will aim to become the sole support authors need.

We are seeing this with RosettaBooks and Open Media. If you look at what Andrew Wylie is doing and what Open Media is doing the role and the cut are probably quite similar.

That 15% cut will remain lucrative and there will be a pitched war between New Publishers, Literary Agents, and any Publishers that realize they can no longer expect 75% of ebook royalties.

Top 3% of Authors

The Authors at the very top and those who’ve already made it are going to make a lot of money. They’ll be getting 50% to 60% and will no longer be subsidizing failed books.

It’s going to become a winner takes all market and the Authors that win will make more money than authors ever have.

Participants unlikely to Survive the Kindle 3, Nook, and eBooks revolution

This is a difficult section to write because who wants Libraries or Bookstores to disappear. However, if we really do get a world where 75% of the market is ebooks and most readers have Kindles and Nooks then a lot of the current players will die out.

Distributors are done

The Platforms take over. Distributors don’t really have a role to play.

Used Bookstores don’t have a part to play

You can’t really sell used ebooks and that’s unlikely to change. If only 25% of the market is physical books there might not be enough used book sales left to sustain actual stores. Used book sales are likely to move to the Internet.

Physical Bookstores will be in a ton of trouble

There’s only a certain point up to which you can push eReader owners to come into a bricks and mortar store. B&N has already offered free books and free coffee and free browsing of ebooks. It’s going to run out of ideas eventually.

There are some bookstores that will survive. However, we’ll probably see fewer bookstores and hardly any independent bookstores.

Read a few of the articles about what’s going on and what bookstores’ strategies are and it’s obvious they are struggling mightily to compete with Internet stores. A market with 8.49% ebooks is threatening to destroy them. Once ebooks gain larger market share few bookstores will survive.

Publishers

Publishers have access to the one remaining irreplaceable resource – writers. Yet, they are trying to force writers into ridiculous terms and are only managing to scare authors away.

As Publishers’ leverage becomes less and less their demands become more and more. It’s like an ultimatum in a relationship – It’s usually a last, desperate move.

It might not be in the DNA of current Publishers to accept a 15% cut and work as helpers and enablers instead of gatekeepers.

The lower 97% of Authors

As we become more efficient and network effects become more powerful it’ll become a winner takes all market. Look at the Internet or the iPhone App Store or the Facebook App Store.

The authors that don’t make it to the top few percentage points will have a terribly difficult time.

The 5-6 failures that were being subsidized by the 1 big winner will now have to survive on their own.

In a way, 70% of royalties is an illusion. If you win then it really kicks in. However, only 1% to 3% of authors will win. Everyone else misses out and now they don’t have Publishers’ advances or backing to see them through hard times.

As the Kindle 3 and the Nook 2 and new Sony Readers transform Publishing and help the spread of ebooks it’s worth taking a look at the lessons the previous world of Publishing has to offer. Perhaps one day a new type of platform will emerge that will make the 30% cut Amazon and Apple take seem archaic.

Kindle 3 as direct connection to Amazon

We look at the Kindle 3 and all we see is an eReader. However, you have to wonder what Amazon sees when it looks at the Kindle 3.

Paul Story has an excellent comment about whether or not Amazon cares about the future of the Kindle –

I think that Amazon cares a lot about the Kindle. They were working on it for three years before its release. We know they think and act long-term. They are sowing seeds.

First the plain text market and then note-taking and education to encompass a paperless society and then the fact that you have an Amazon vending machine in your hand will come into play. At that time, the Kindle will be everywhere and we will be buying tangible goods from Amazon.

Yeah, I think they care.

Let’s consider it from a strategy perspective.

What exactly is the Kindle 3?

Well, we get a few hints from the behavior of customers –

  1. Customers love their Kindles and will undoubtedly love the Kindle 3.  
  2. Customers tend to carry their Kindles everywhere. The Kindle 3 is even easier to carry everywhere.  
  3. Kindle owners buy more books than they used to. They mostly buy from Amazon.
  4. There are some customers who’ve admitted they’ve bought other things from Amazon because of being Kindle owners. That’s easy to imagine.
  5. Customers trust Amazon.

A Kindle owner has a direct and persistent connection with Amazon –

  • 1 month battery life to be directly connected to Amazon.
  • No computer required to buy from Amazon.
  • WiFi to connect to Amazon when 3G isn’t available.
  • Just $139 to get a direct connection to Amazon.
  • Kindle WhisperNet to get all these features that keep you in direct touch with Amazon.

It’s exactly what Paul said – It’s an Amazon vending machine in your hand.

The Kindle 3 is Amazon’s Vending Machine in your hands – It ensures there’s a direct connection to Amazon and it ensures you buy from Amazon.

Kindle 3 and Trust

Mr. Bezos talked about earning customers’ trust on the Charlie Rose show. His words were something to the effect of –

It’s very easy to lose trust and very hard to gain trust. We want to gain customers’ trust.

What he didn’t mention is that trust grows with every purchase and it grows if you always have an Amazon Kindle with you. It’s commitment and consistency – Every single Kindle book we buy makes us stronger Kindle customers and less likely to switch sides.

It’s building loyalty.

We’ve seen this with the iPod and the halo effect it created and how that’s helped sales of the iPhone and the iPad. Amazon is tapping into that magic with the Kindle.

Kindle 3 is the path of least resistance

How could Amazon get every single person to carry an Amazon Vending Machine with them?

There aren’t very many candidates – Phones are too competitive though Amazon may eventually enter this area. There aren’t that many other devices.

So the Kindle 3 suddenly seems like genius –

  1. Come in from an angle that not many people care about (reading books).
  2. Cater to the most valuable niche (people over 40 who read books and have disposable income). Let Apple fight for all the 17-year-old kids who have no money. Amazon wants the actual spenders.
  3. Come in with the most deceptively simple device.

No one is every going to suspect the Kindle 3 of being Amazon’s Vending Machine. It isn’t good for anything except reading.

Well, actually it is. It’s good for buying things from Amazon, it’s good as a direct channel to customers, and it’s good for earning trust and strengthening the customer-Amazon relationship.

You could argue it’s better suited to earning trust and building a relationship than any other device precisely because it puts so little focus on being new and flashy. Users aren’t buying it to show off or for an emotional high.

Amazon once sold only books

There can be no better argument for the Kindle’s future role as Amazon Vending Machine than Amazon’s past behavior.

Perhaps then, as now, Mr. Bezos figured out the least competitive area. One that had potential on its own and also provided an entryway to every other area. Trust transfers.

Once you’re buying books from Amazon you trust it and next thing you know you’re buying everything from Amazon. With the Kindle 3 it’s the same strategy – It’s just so painfully obvious and so similar to what Amazon’s used in the past that competitors are bound to miss it completely.  

Kindle 3 can easily be used to sell everything

You have to look at everything Amazon is selling online and ask yourself – What’s stopping them from selling all of these things via the Kindle 3?

The answer is that Amazon always thinks 10-30 years ahead. It’s almost as if they’re teasing. They now let you download 300MB Audible audiobooks to your Kindle 3 via WiFi. Yet they aren’t selling mp3 songs. It’s patience and strategy.

They focus on the area that’s not sexy enough. Both Sergey Brin and Mr. Jobs have stated that there is no future in books. Their companies’ efforts aren’t focused on reading and that allows Amazon to keep expanding – almost unchecked. If B&N hadn’t miraculously produced the Nook the eReader wars would be over by now.

Keep in mind that no one wanted mp3 players when the iPod took over. Their biggest competition was probably Creative. Now Google and Microsoft are both running scared.  

Once Amazon has thoroughly won the eReader war it will expand to replacing paper and once it has won that it will finally switch on the Amazon Vending Machines.

Kindle 3 gives Amazon customers without acquisition costs

How do you get customers?

You advertise for them. You take a hit on your first product. You pay Google for search traffic.

There are huge acquisition costs. There’s a ton of work and effort and thinking and the risk of failure. Well, with the Kindle 3 all that is gone.

If Amazon were, in 2011, to start selling groceries through the Kindle 3 they would have zero acquisition costs.

Safeway would advertize and buy Google traffic and put out promotions. All Amazon would have to do is push a button and every Kindle owner would know Amazon Fresh is now doing same day delivery.

Kindle 3 is FAR more important than Kindle Apps

With Kindle for iPhone Apple won’t let Amazon sell even ebooks through the app. With the Kindle 3 Amazon could sell cows if they wanted.

If you’re playing in someone else’s system it’s someone else’s rules. Different companies rule different channels and they all want a cut. With the Kindle 3 Amazon is suddenly free – It doesn’t have to pay any middle-men to reach its customers.

There is no Free on the Internet – which makes Kindle 3 critical

The Internet is perhaps the biggest example of the illusion of free. Ask any company or anyone selling a product if it’s free – It’s not. It’s frustrating and expensive and time-consuming and there are always people looking to take a cut.

It’s the same with Facebook or with the iPhone App Store. There’s always a 30% to 50% cut that the channel owner takes.

The Kindle 3 lets Amazon bypass all of this. A user logs on to the Kindle Store and buys a book. That’s it. Amazon doesn’t have to buy keywords on search engines and it doesn’t have to do advertising on Facebook and it doesn’t have to give out any cuts. 

Every company is doing this

Look around you – whether it’s Facebook with its App Store and closed off walled garden or Apple with its closed ecosystem. Every company is trying to build a direct channel to customers and enclose them in a beautiful walled garden.

Even the most open companies try to do this – They just do it in a smarter/stupider way (smarter because it seems open and stupider because it doesn’t work as well).

Kindle 3 as direct channel to customers

This is a recurring theme because it’s the best possible use of the Kindle. Kindle 3 not only shows Amazon’s commitment to readers it also shows its commitment to building a direct channel to customers.

  1. In October 2009 we talked about Kindle’s vital role as Amazon shifts to Digital Media.
  2. In September 2009 we had talked about how the Kindle will let Amazon bypass Google.  
  3. In January 2009 we had talked about Kindle as a Trojan Horse.

Amazon is doing everything it can to build direct channels to customers. Completely bypassing TV, the search engines, and every other middle-man.

It’s the way things should be – A very efficient world is one without middle-men. Even sites like mine are just information arbitrage – In a perfect world the best reviews and tips should be available to prospective owners through other owners.  

Efficiency means eliminating all the middle-men

The Internet has improved things a lot – However, one set of middle-men have been replaced by another set of middle-men. A huge amount of companies on the Internet are working on arbitrage – it might be information arbitrage or it might be very well disguised arbitrage but it’s arbitrage nonetheless.

Just as we moved from a situation where middle-men had total control to a new situation where middle-men had less control (or one middle-man seized up all the control) we will move to a situation where middle-men are non-existent.  

Kindle 3 and Apple iPhone are two great examples of this. There is no-one except the platform between buyers and sellers. We haven’t had a situation where creators could get 70% of sales in a very, very long time. We know that Publishers used to give authors only 8-15%. However, similar situations exist in lots and lots of markets. The platforms will destroy this. Creators suddenly have a 70% cut for themselves.

Kindle 3 is, without a doubt, the Amazon Vending Machine

If a company were greedy or impatient it would try to cash in too soon. If it were too smart for its own good it would make the Kindle multipurpose to try to sell more quickly.

Amazon is doing neither. It is willing to keep building out its platform and to keep creating direct links with customers. It’ll only switch things on after everything is in place and can’t be undone.

You’d think that would be when there are 10 million Kindles sold. However, this is Amazon. It is going to wait for 50 or 100 million Kindles sold and only then switch on the Kindle Vending Machine.

In a customer-Amazon relationship Amazon has a right to think that no-one else should get a cut. How could it ensure that? Well, build out a direct channel and bypass everyone. That’s what the Kindle 3 represents.